Diversification of Islamic Financial Insturments
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Sudanese Sukuk Market
 Sudan Governmental Certificates (Sukuk)
Sudan’s fixed income security market is based on Islamic Shariah Principles. The Government
Musharakah Certificates and the Government Investment Certificates (which are similar to the
conventional treasury bills and the government bonds), as well as the Central Bank Ijarah
Certificates are regularly issued by the Ministry of Finance and the National Economy. Both
the Central Bank of Sudan and the Government of Sudan have raised funds through the
domestic issuance of Shariah-compliant securities via the Sudan Financial Services Company
which was created in 1998. Since the first issuance in 1999, the Government Musharakah
Certificates has been growing rapidly depending on the high profitability, free risk, and the
short- term maturity (one year) and too high liquidity, which is match with the objectives of
the investors. On the other hand, the growth of Government Investment Certificates is not as
favourable as Government Musharakah Certificates as it showed sluggish development due to
long-term duration (2-6 years) and stability of profit. In 2013, the Government Musharakah
Certificates outstanding increased by 8.5 % from previous year, reaching SDG 14,131 million,
while the Government Investment Certificates outstanding decreased due to zero issuance
while some of the Sukuk has reached its maturity (CIBAFI & IRTI, 2016).
The government investment certificates (GIC) are medium-term financial instruments to
attract financial resources from investors based on Mudarabah or Ijarah for financing
projects allocated by ministry of finance and national economy. The maturity date for such
certificate varies from 2 to 5 years. Beside their roles in providing funds, these certificates aim
to achieve liquidity management on the macro level, develop domestic capital markets and
reduce the inflationary impact of conventional debt by providing stable funding to the
government in the form of goods and services. The Sudanese government only issues Shariah-
contract Sukuk, and there is no existence for conventional bonds.
 Central Bank Musharakah Certificates (CMCs)
Sarker (2015) argues that “even though the CMCs were issued for the implementation of
monetary policy yet, it has been proven to be too costly. The CMCs were similar to trust
certificates in a closed-end fund managed by the SFSC, which assigned investors as stake in
commercial banks in which the central bank was a shareholder. Despite the strong investor
demand, the security design of CMCs was severely flawed and the issuance of CMCs was soon
discontinued because of its high cost, limited volume, and lack of its tradability”.
According to Sarker (2015), “CMC is designed as an instrument based on a profit- and loss-
sharing contract. It is an asset based security issued against central bank and Ministry of
Finance equity participation in a commercial bank’s assets. The CMC is sold through auction
and the return on investment is determined by the expected return on the underlying asset
where a pro-rata share of the income stream is distributed between the partners. Among its
features, CMC can be used by a central bank to conduct monetary operations, or offers bank an
investment opportunity for their excess reserves, besides, it has medium-term maturity, is
transferable and is tradable in the stock exchange. However, access to CMCs is limited only to
commercial banks, Government-owned companies’ funds and insurance companies”.